U.S. Apartment Rents Rise, But the Pace Is SlowingDigested From "Apartment Rents Rise, But the Pace Is Slowing" Wall Street Journal (07/09/13) P. A3 Wotapka, Dawn

Reis Inc. reports that nationwide rents increased an average 0.7 percent to $1,062 a month from April through June. The increase is slightly higher than the 0.6 percent increase in the first three months of the year, but far below the 1.3 percent rise experienced in 2012. "The weak labor market and income growth continue to hold rent growth in check," wrote Reis researchers. Meanwhile, the vacancy rate held steady at 4.3 percent for the second quarter, marking the first time since early 2010 that the rate did not decline. Limited apartment supply enabled apartment owners to hike rents. But with around 160,000 new units expected in the top 54 metro areas this year, they could be under pressure to lower rates if the economy weakens. At the same time, rising mortgage rates could benefit the sector, making it more affordable to rent.

Which Way Is the Wind Blowing in the Windy City's Apartment Market?Digested From "Chicago Area Rents Rise in 2Q With Vacancy Rate Flat" Chicago Tribune (07/09/13) Podmolik, Mary Ellen

New Reis Inc. research shows that apartment vacancies in the Chicago metro area were relatively unchanged in this year's second quarter. However, monthly rents continued to edge up. The local apartment vacancy rate was 3.6 percent as of June 30, down 0.1 percent from the first three months of the year. The average effective rent locally -- a measure that includes the value of such enticements as free rent offered to residents -- was $1,058.01 in the April-through-June period. That is an increase of 0.6 percent from the first quarter and of 2.5 percent from the second quarter of 2012.

Renovate or Relocate? More Residents Are Choosing the LatterDigested From "Investing in Expensive Renovations for Rental Apartments" Wall Street Journal (07/12/13) Keates, Nancy

With apartment vacancy rates nationwide at their lowest levels since 2001, more and more residents are staying put and investing thousands of dollars in renovations and upgrades even though they know that if they leave they will leave those upgrades behind or have to return the space to its previous condition. Daniel de la Vega, who received permission from his apartment owner to tear down a wall to make his living room larger, said, "If it's something you're going to live in for the next three years, you don't mind spending the money. It's worth it. It's about lifestyle." Most renovations tend to be superficial, like new paint or carpeting. But some apartment owners and managers say they have seen an increase in more expensive and elaborate renovations, including requests for structural changes. Long-term apartment residents find that strict rental rate regulations in some cities make renovations a more affordable proposition than looking for another apartment with the upgrades they seek. In some cases, owners are doing the requested work themselves, but allowing residents to select the upgrades or at least have a voice in the choices.

Five Main Reasons for Upswing in N.J. Apartment MarketDigested From "Vacancy Levels Hit Record Low Throughout Sanzari Portfolio" NorthJersey.com (07/11/13)

Stringent mortgage requirements, high unemployment rates, and low housing inventory are among the factors driving many would-be homebuyers to New Jersey's rental apartment market. A growing number of college graduates who do not have the funds or credit needed for a home down payment, combined with an influx of corporate relocations from the headquarters of Mercedes-Benz USA, IBM, and A&P have further fueled an increased demand for apartment living. Alfred Sanzari Enterprises, one of the Garden State's most active real estate development firms, has seen vacancy rates fall throughout its residential portfolio over the past year. "Our vacancy levels fell to about 1.1 percent in May, down from almost 8 percent just one year ago, and consistently have been under 2 percent over the last year," said Victoria Tinen, property manager.

How Soaring Student Debt Could Put the Brakes on HousingDigested From "Shadow of Student Loans Could Hurt Housing Market as Graduates Swim in Debt" Tampa Bay Times (07/06/13) Harwell, Drew

Soaring student debt levels could put a damper on the housing market, as 38 million Americans carry a total of $1 trillion in student loans, surpassing what is owed nationally on car loans and credit cards. Many college graduates are delaying homeownership until they can get most of their student loan debt paid off. This debt, coupled with recession-related job losses, are believed to be responsible for a decrease in sales by first-time home buyers to 28 percent in May from the usual level of 40 percent, according to the National Association of Realtors. According to a July survey by One Wisconsin Now, people paying off student debt are 25 to 36 percent less likely to become homeowners than those without student loans. Student loans make it difficult for young people to build up their savings accounts to make down payments or meet lenders' debt-to-income requirements, and they are less likely to purchase cars, go on vacation, or even start their own businesses. "It interrupts the whole life cycle of real estate and, in essence, it takes a big chunk out of the foundation, which is that first-time home buyer," says South Florida independent housing analyst Jack McCabe. According to the Federal Reserve, the homeownership rate for 30-year-olds with student loan debt has fallen to 23 percent, marking a decline of 10 percentage points over the last five years.

Downtown Redmond (Wash.) Braces for Wave of New ApartmentsDigested From "Wave of New Apartment Projects for Downtown Redmond" Puget Sound Business Journal (07/10/13) Stiles, Marc

Downtown Redmond, Wash., is eagerly anticipating a wave of new apartments. Commercial real estate broker Ross Candoo of Candoo Associates Inc. remarks, "For years, many Microsoft and Google employees have made the commute from Seattle to Redmond and Kirkland because they couldn't find the quality apartment properties or hip neighborhoods that Seattle offered." Too many apartments on the Eastside were built in the 1980s and 90s, Candoo adds. Although some have been renovated in recent years, the apartments are "older stock nonetheless" and "not of great appeal" to well-paid, young apartment residents. A total of three communities are are currently under construction in downtown Redmond to meet this demand. By the end of July, Resmark and Legacy Partners expect to begin building two more. Altogether, the five communities will deliver nearly 815 units when completed, reports city Senior Planner Gary Lee. The developers are hoping to appeal to residents who work at the various Eastside technology firms.

According to a recently released report from Charlotte-based Real Data, supply may outpace demand over the next two years if a number of proposed and planned apartment communities for the greater Wilmington, N.C., area are completed. The firm, which tracks multifamily housing growth and rental rates throughout the Southeast, has placed Wilmington's average vacancy rate at 8.3 percent. There are currently just over 14,300 rental units in the greater Wilmington market -- an increase from 13,728 apartments recorded at the end of last year's second quarter. Wilmington ties with Charleston and Greensboro for having the second-highest average vacancy rate in the nation's Southeast region. Myrtle Beach registered the highest rate at 10.3 percent, followed by Jacksonville (9.7 percent). Overall, Real Data researchers note that the average vacancy rate in metro Wilmington is expected to approach 9 percent in the coming year with a wave of new apartment communities coming on line marketwide. However, Real Data multifamily analyst Engle Addington insists that it may be too early to declare Wilmington's apartment sector overheated. He concludes, "The data reflects what we know is pending, but you never know when the proposed units will start or complete construction. It could be next month or a couple of years from now. It's hard to say."

How Many Apartments Did Landmark Acquire on Its Recent Spree?Digested From "Landmark Apartment Trust of America Acquires Eight Multifamily Properties for $169.3 Million" Herald Online (07/08/13)

Landmark Apartment Trust of America has acquired eight apartment communities in four separate transactions for a combined purchase price of $169.3 million. Altogether, the communities boast 2,252 rental units, of which 95 percent are occupied and boast a number of good amenities. The company acquired Landmark at Monaco Gardens in Charlotte and Landmark at Barton Creek in Austin on June 28. It then acquired Landmark at Stanford Reserve and Landmark at Grand Terraces, both also in Charlotte, three days later. Additionally, it acquired Landmark at Courtyards on the River in Tampa and Landmark at Fountain Oaks in Jacksonville, followed by the Landmark at Caveness Farms in Wake Forest, N.C. and the Landmark at Lexington in Raleigh. "These strategic acquisitions directly align with our focus of purchasing apartment communities in quality locations throughout the sunbelt region at advantageous pricing and significant discount to replacement cost," said Stanley J. Olander, CEO of Landmark Apartment Trust of America.

At What Price Home Properties' Public Offering?Digested From "Home Properties Prices Public Offering Of 3.85 Million Shares At $63/Share" RTTNews (07/09/13)

Home Properties has priced a public offering of 3.85 million shares of its common stock at $63 per share, totaling approximately $232.7 million. The apartment REIT plans to use the net proceeds to fund acquisitions, new development, redevelopment of apartment communities, and for general corporate purposes.

The OliverMcMillan Co. confirms that it has sold three of its prime apartment communities in downtown San Diego for $141.8 million in cash and assumed liens. The identity of the buyer(s) was not disclosed. Together, the three properties contain a total of 459 rental units.

What Is the Great Housing Recovery Myth?Digested From "The Housing-Recovery Myth" Marketwatch (07/09/13) Weidner, David

In this commentary, David Weidner argues that the housing market recovery is benefiting only those individuals who can obtain ample credit or did not saddle themselves with an expensive house before the financial crisis. Despite low interest rates and modest home price gains, many homeowners continue to struggle. A new report by Lender Processing Services shows a 15 percent decline in delinquent mortgages this year. However, the report also indicates that delinquent mortgages account for 6.08 percent of outstanding mortgages, or 1.5 times the rate recorded from 1995 to 2005. Moreover, the percentage of new problem loans entering the system rose to 0.73 percent from 0.55 percent between 2000 and 2004, and over 14 percent of existing home loans remain underwater. On top of all that, Weidner says first-time and move-up buyers are having a hard time competing with investors, who account for 20 percent of the overall market, 67 percent of the market for distressed properties, and are very active in such states as California and Florida, according to a May report by Campbell/Inside Mortgage Finance. He says the market is much bleaker for people who bought their homes prior to the crash and continue to owe more than their properties are worth, as well as for millions of people who have lost their homes to foreclosure.

What Might the Providence (R.I.) Economy Need? More Apartments!Digested From "The Providence Economy May Need Some More Apartments" WPRI.com (Rhode Island) (07/11/13) Nesi, Ted

Evidence suggests that lots of people want to live and rent apartments in Providence. The vacancy rate for apartments in Rhode Island's capital city was just 2.9 percent as of June 30 -- the 11th-lowest in the country, notes Reis Inc. Such prime communities as The Regency Plaza and The Foundry are more than 90 percent occupied, and there is already a waiting list for the new micro-lofts coming to the Westminster Arcade. Columnist Ted Nesi notes that the problem is Rhode Island simply "doesn't welcome new building." Indeed, the Providence metro area regulates housing growth more heavily than just about any other market in the United States. Many developers complain that the costs of new multifamily housing construction in the state are simply too high to make economic sense -- relative to the monthly rents they would be able to get -- without major public subsidies like the historic-preservation tax credit.

House Republicans on July 11 released the details of legislation that would eventually close Fannie Mae and Freddie Mac and nearly eliminate Washington's support of the U.S. mortgage market. The measure is expected to be introduced by the end of July. GOP legislators have long angled to shutter the two government-sponsored enterprises and relegate the mortgage lending business solely to the private sector. However, Democrats and some moderate Republican senators have argued that such a move could limit homeownership. Many question whether the private sector would even issue mortgages without a government backstop. In contrast to the House proposal, the Senate introduced a bipartisan measure that would replace Fannie Mae and Freddie Mac with an entirely new government agency dedicated to serving as the last line of defense in the event of a housing crash. Lawmakers' drive to preserve government intervention in the mortgage sector may prevent a bill from passing in both chambers of Congress.

A subcommittee charged with investigating Manchester, Conn.'s trash rebate program is recommending a policy granting refunds to some condominium and apartment units be abolished. But some directors say the rebate should be eliminated for all rental units, but extended to all owner-occupied condos. Initiated some 25 years ago, the rebate program grants as much as $100 annually to residents of condo and apartment communities built prior to 1997. The program has come under fire from residents of newer units who do not receive the benefit. "There is a basic inequality," laments John Moreschi, who represents the newly formed Manchester Condominium Alliance that includes 40 condo associations and over 2,000 units.

September 23-25 at the Turnberry Isle Resort in Miami. This isn’t your grandfather’s revenue management event: the Apartment Revenue Management Conference features a radically expanded scope of topics to include ancillary income, expense management, business intelligence and other subject matter designed to aid you reach your organization’s revenue goals.

There are user conferences for those wishing to learn how to use specific revenue management software. The Apartment Revenue Management Conference is something you won’t find elsewhere: best practices, benchmarking, networking and bringing ideas from outside the industry. To wit: Keynote speaker Greg Cross, Senior Vice President of Revenue Management for Hyatt Hotels Corporation, who will speak about current trends in lodging and their possible parallels in the rental housing industry.

And, if you register by August 14, you’ll save $100 on admission to the rental housing industry’s sole event dedicated to staying ahead of the ever-evolving operational curve.

Join NAAEI, Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series in the industry to provide state and local association members with access to industry thought leaders to discuss innovative ideas, best practices and emerging industry trends. These webinars will give participants the tools they need to become industry superstars in their own right.

Upcoming Webinars:

7/24/13 Rommel Anacan - Dollars and Rents: How to Help Your Teams Navigate Residents Through the Changing Rental Market

8/7/13 Anne Sadovsky - What's New and What's Hot in Fair Housing

8/21/13 Stephanie Graves - How To Make Your Residents Work For You - Resident Referral Ideas That Work

Get Hooked on the Latest Marketing Tool: The Marketing Community on NAA Connect

Don’t miss out on your chance to join the valuable collaboration and networking tool to help you succeed in the Marketing Community on NAA Connect. NAA Connect is NAA’s new home for discussions, networking, document sharing and peer-to-peer collaboration.

Hot topic of the week: What data are you and your company doing to communicate and empower front-line marketing staff? Are you data sharing? Increasing customer service training? Join the conversation today in the Marketing Community and see what good idea can help you tomorrow.

Couldn’t attend the 2013 NAA Education Conference & Exposition in San Diego, or missed a great session? Don’t despair—you still can enjoy the best education sessions in the apartment industry, including video!

NAA’s Education Institute (NAAEI) is once again presenting its “Rewind” program, offering 21 recorded video sessions and 20 PowerPoint-synced audio sessions from the 2013 NAA Education Conference & Exposition—all for just $299!

NAAEI will offer the course for apartment industry supplier partners, Supplier Success, as a series of 3 webinars.

The Supplier Success course is designed to offer an overview of the apartment industry and recommends ways that suppliers can maximize partnerships with apartment owners, apartment management companies and apartment association members.

The advantage of this live webinar format is that students can participate from wherever they are, even while traveling on business. Students also have the opportunity to ask questions, share experiences and learn not only from the instructors, but from each supplier partner taking the course.

The course is available via webinar series July 16, 18 and 23 from 2 p.m. to 4 p.m.

Registration Fee: $99 for members; $129 for non-members

Group pricing available for 10 students or more, contact Shana Treger. Each webinar will be recorded in the event you miss a class.

Don't forget to check out Lauren Boston's weekly blog for a humorous take on all the latest trends in the multifamily housing industry. Check out Lauren's latest blog post!

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The Industry Insider, a weekly e-newsletter published by the National Apartment Association (NAA), is your source for apartment industry news and information. This is a complimentary member benefit for NAA members. Membership in your local apartment association also entitles you to membership in NAA at no additional cost.The National Apartment Association (NAA) is America's leading advocate for quality rental housing. NAA's mission is to serve the interests of multifamily housing owners, managers, developers and suppliers and maintain a high level of professionalism in the multifamily housing industry to better serve the rental housing needs of the public.For more information on NAA and The Industry Insider, contact:

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